Record-breaking inflation, geopolitical tensions and other macroeconomic challenges that have significantly dampened consumer demand will lead to an expected 6.5% decline in the shipments of smartphones to 1.27-billion units in 2022.

The latest data from International Data Corporation’s (IDC’s) Worldwide Quarterly Mobile Phone Tracker shows that the latest forecast figures represent a reduction of three percentage points from previous projections.

“The events of the last 12 months have shaved 150-million units off the market for 2022 from our forecast in the second quarter of 2021,” says IDC worldwide mobility and consumer device trackers research director Nabila Popal.

“The supply constraints pulling down on the market since last year have eased and the industry has shifted to a demand-constrained market. “High inventory in channels and low demand, with no signs of immediate recovery, has original-equipment manufacturers panicking and cutting their orders drastically for 2022,” she explains.

However, IDC expects the setback to be short term and the market to rebound in 2023 with 5.2% growth year-on-year and, in the long term, a five-year compound annual growth rate of 1.4%.

Meanwhile, despite the unit decline, average selling prices (ASPs) grew 10% year-on-year in the second quarter of 2022 and are forecast to grow 6.3% for the full year.

The premium segment, with pricing of $800 and above, has proved resilient, growing four percentage points in share to 16% of the total smartphone market. This is expected to continue on a growth trajectory.

“This includes foldable devices, which is the fastest-growing segment today and expected to increase 70% year-on-year in 2022 to reach 13.5-million units shipped.”

Regionally, the economic crisis hit emerging markets, where a majority of the shipment volume comes from sub-$400 devices, significantly harder.

Smartphone shipments in Central and Eastern Europe are expected to decline 17.4%, while Asia Pacific, excluding Japan and China, which was previously forecast to grow 3%, is now expected to drop 4.5% in 2022.

“The most significant volume drop is coming from China, which is now forecast to decline by 12.5%, or roughly 41-million units, contributing almost half of the overall reduction this year.”

Comparatively, developed markets, such as countries in North America and Western Europe, are forecast to report much better volume growth in 2022.

The US is expected to report relatively flat growth, of 0.3% year-on-year, while the Canadian market will fare slightly better, with 3.2% growth, and Western Europe will likely report a slight 0.7% decline.

Meanwhile, global shipments of fifth- generation (5G) devices are expected to grow 23.6% year-on-year in 2022 and account for 54% of all shipments, with 688-million devices and an ASP of $616.

In the long term, 5G is projected to reach a volume share of 79% in 2026, with an ASP of $444.

The ASP for fourth-generation devices, meanwhile, is expected to reach $176 in 2022, declining to $106 by the end of the forecast period.

As a result, the overall smartphone ASP will decline from $413 in 2022 to $373 in 2026.

“The resilience of the market’s upper echelon has been a testament to the success of iOS, which has not witnessed a full-year shipment decline since 2019,” adds IDC worldwide mobility and consumer device trackers research director Anthony Scarsella.